1. Field of the Invention
The present invention relates to a credit card payment system and method; and more particularly to a credit card payment system and method including a credit card having a unique identification number and a zero line of credit (except for an optional overdraft limit), henceforth referred to as a zero-LOC card or a zLOC card, issued to an individual or a small business, that is funded by a money transfer from a funding card account's available line of credit.
2. Description of the Prior Art
Fewer and fewer individuals carry any significant amount of cash upon their person. In lieu of carrying cash, credit cards/debit cards have become a mainstay for everyday payments. Credit cards provide tremendous convenience over cash and checks but are not available to a large segment of the population. This is the case even when there are a large number of credit-worthy cardholders who are willing to extend credit to these individuals on a transactional basis but are not willing to become guarantors to get regular credit cards issued to these individuals. Plastic payment cards currently can be grouped into three predominant categories: (i) charge/credit cards; (ii) debit cards; and (iii) prepaid cards.
There also exist systems and methods for facilitating subsidiary card accounts. Existing products take many forms. One such product is a payment and funding vehicle that allows a parent and an administrator to provide funds in the form of a credit line to a subsidiary. The system thereby facilitates control over the subsidiary's spending capacity and/or debt accumulation. The system for administering a subsidiary card account includes a parent and an administrator. The parent, which is responsible for a related credit instrument, e.g., a parent account, requests the administrator to issue a credit card account to a subsidiary. The administrator facilitates the establishment and administration of the subsidiary card account so that it may be used by the subsidiary for payment transactions. The administrator also facilitates the determination and adjustment of appropriate spending power for the parent account and spending capacity for the subsidiary card account in accordance with a predetermined set of rules. A set of rules may require an allocation of risk between the administrator and the parent whereby the spending power of the parent account is reduced by an amount that is less than the credit line, i.e., spending capacity, established for the related subsidiary card account, in accordance with, and reflecting, an allocation of risk to the administrator. In addition, the administrator can facilitate execution of a request from the parent to define, modify, and/or terminate the spending capacity and/or debt accumulation limits for the subsidiary card account.
Various prepaid or gift card systems have been provided, wherein a person generally buys a card with an amount associated with the card for use as a prepaid card (such as a phone/gas card) or as a gift card. For example: U.S. Pat. No. 6,473,500 to Risafi et al. discloses a system for using a prepaid card permitting a card user to purchase a card, issued by an issuer such as a bank, through an agent at a retail establishment via a terminal and use the card to purchase goods and services, and reload the card for future use; U.S. Pat. No. 6,615,189 to Phillips et al. discloses a purchase card that is purchased by a purchaser for a designated recipient, wherein the purchase card may also be converted to a credit card; U.S. Patent Application Publication No. 20030053609 to Risafi et al. discloses a system and method for transferring money by use of a prepaid card account wherein two cards are issued to the user accountholder, one of which is provided to another user, and either user may add value to the prepaid account so that the other user may use the card and that value in a financial transaction; U.S. Patent Application Publication No. 20040064412 to Phillips et al. discloses a method of issuing a purchase card including the steps of presenting a purchaser with the opportunity to buy the purchase card, determining whether the purchaser has sufficient funds, creating a purchase card account, and issuing the purchase card, wherein the purchase card may be issued in connection with another credit card, for example as a rebate for purchases on the credit card, and the purchase card may be converted to a credit card; U.S. Patent Application Publication No. 20040249752 to Prato et al. discloses a method enabling a prepaid, open-ended stored-value charity card to be used as a fundraising vehicle providing dollar-based monetary funding to pre-selected charities; U.S. Patent Application Publication No. 20020143703 to Razvan et al. discloses a cash card which is freely transferable, redeemable and usable and which a user can purchase with a set amount of credit thereon and add to the balance as it is used; U.S. Patent Application Publication No. 20030195842 to Reece discloses a method for making electronic transactions providing a limited-use credit card for use over a network such as the Internet and it has a limited life span and/or a limited spending limit corresponding to the amount of the stored value transaction optionally less a transaction fee; and Foreign Publication JP 2001/222665 to Awano discloses a card settlement system using a credit card.
Gift card type methods and systems generally similar to pre-paid cards have been provided. For example: U.S. Patent Application Publication No. 20070187487 to Wilen discloses a method of distributing and activating gift cards by attaching a non-activated gift card to an article and selling the article to a consumer so that the consumer activates the gift card by allocating a dollar valve to the gift card and then sends the gift card to a specific person as a gift; U.S. Pat. No. 5,984,180 to Albrecht discloses a method and system for providing purchasable value for gifts and other uses in the form of a credit instrument wherein purchaser of a gift credit instrument authorizes a credit institution with which the purchaser holds a credit account to create a limited-value, non-renewable secondary account linked exclusively to the purchaser's credit account, wherein the gift credit instrument may be used in the same manner as the purchaser's credit instrument but it expires after a certain period of time or after the initial value of the secondary account is spent; U.S. Pat. No. 7,128,261 to Henderson et al. discloses a method and apparatus for generating and dispensing gift cards for an associated merchant, wherein a customer enters a value for the gift card through a customer input pad, and pays for the card by swiping a credit card through a credit card reader; and U.S. Patent Application Publication No. 20020026418 to Koppel et al. discloses a method for providing a pre-paid anonymous electronic debit card compatible with an existing network of credit cards so that upon pre-payment by a customer, the issuer issues to the customer a pre-paid electronic debit card, bearing the name of the issuer, for accessing one of the sub-accounts; the customer can receive the card for personal use or send it to a third party, either as a gift or as payment for a purchase.
Devices, including microprocessors, semiconductor chips, or cards having multiple magnetic strips, for storing information via a plurality of cards on one card/device have also been provided. For example: U.S. Pat. No. 5,884,271 to Pitroda discloses a universal electronic transaction card (“UET card”) device with microprocessor capable of serving as a number of different credit cards, bank cards, identification cards, employee cards, medical and health care management cards and the like; U.S. Pat. No. 6,402,039 to Freeman et al. discloses a chip card including a flexible body; at least one semiconductor chip supported within the flexible body and comprising a memory for storing the information; and U.S. Pat. No. 6,631,849 to Blossom discloses a selectable, multi-purpose card comprising a plurality of features stored in memory means operatively mounted on the card and selection means for allowing a user to select a feature. In one embodiment the card includes a plurality of magnetic strips to allow swiping each magnetic strip separately.
Dual credit cards and non-credit card devices have been provided wherein a credit account is created along with transactional or debit card features. For example: U.S. Pat. No. 7,263,507 to Brake, Jr. et al. discloses a Customer Activated Multi-Value (CAM) card provides a customer with a primary use as a transaction card which can be further activated to have a secondary use as a credit card; and U.S. Patent Application Publication No. 20050077350 to Courtion et al. discloses a dual card, which facilitates payment for goods or services from either a credit account or a stored value account.
Additionally, various sponsor cards and/card funding vehicles have been provided, but these devices fail to provide a general purpose credit card having a zero line of credit (except for an optional overdraft limit) that is substantially funded by way of existing lines of credit from other credit cards with no limitations on how many times or how often the card is funded from other credit cards. For example: U.S. Pat. No. 7,165,049 to Slater discloses a method and system for issuing a sponsor funded stored value card wherein a sponsor company funds an account associated with the stored value card and the card is issued to a cardholder, who can withdraw funds from the account, but cannot deposit additional funds in the account; Visa Buxx found at URI usa.visa.com/personal/cards/prepaid/buxx_faq.html?it=12|/personal/cards/prepaid/visa_buxx.html|FAQ#anchor—3 discloses a prepaid, reloadable Visa card created especially for teens wherein parents enroll their teen in the program and monitor their teen's spending. Parents can set the spending limits by the prepaid amount loaded on the card. A Visa Buxx card cannot be upgraded to a regular credit card. U.S. Pat. No. 6,267,292 to Walker et al. discloses a financial tender transfer system that allows a transferor to transfer credit or make payments to a transferee by debiting the credit card of the transferor and crediting the credit card of the transferee so that the transferee has immediate access to the transferred money and ensures the transferor's credit card is valid, wherein any amount of value up to the full credit line of the transferor can be transferred to the transferee.
U.S. Pat. No. 6,796,497 to Benkert et al. discloses a flexible limit subsidiary card account in which the administrator/issuer facilitates the determination and adjustment of the appropriate spending power for the parent account, and the spending capacity for the subsidiary card account, in accordance with a predetermined set of rules. The parent is enabled to define and change the spending capacities (e.g., credit limits or other mechanisms for approving or denying an individual transaction) for each subsidiary card account or to cancel one or more subsidiary card account 132 altogether. No disclosure is contained by Benkert et al. concerning a credit card that is issued without need for a credit check, and which derives its spending power through one or more funds transfer transactions which transfer funds from other credit cards into this card's associated account.
US Patent Publication 2008/0086759 to Colson discloses verifying and authenticating the identify of network users. Also disclosed by Colson are systems and methods for setting desired risk or verification levels, for using information from a plurality of sources, and for verifying or authenticating the identify of small business and principals or other employees. Colson does not disclose or suggest a credit card that is issued without need for a credit check, and which derives its spending power through one or more funds transfer transactions which transfer funds from other credit cards into this card's associated account.
None of the references disclose a credit card system adapted specifically for a credit card that is issued without need for a credit check, with such a card deriving its spending power through one or more funds transfer transactions which transfer funds from other credit cards into this card's associated account. Moreover, none of these card systems provide a plastic payment instrument especially adaptable for multiple end uses capable of being tailored for specific uses, such as: (i) a teen credit card with specific limits, that can later on be graduated to a regular credit card; (ii) a budget credit card to compartmentalize one's spending; (iii) an enhanced privacy protection credit card; (iv) a plurality of cards with user-controlled spending limits (for distribution within a family or small business) that are all funded dynamically by the user from another credit card; (v) a published credit card that can be used to receive payments for goods and services from other credit cards; or (vi) a credit card used to give a personal loan or gift to a friend, associate or a family member.
Notwithstanding the efforts of prior art workers to construct various credit and prepaid cards, there remains a need in the art for a credit card payment system that includes a credit card having a unique identification number and a zero line of credit (except for an optional overdraft limit) issued to an individual or a small business that is funded by transaction(s) transferring funds from another independent credit card account to provide a credit balance on the zero-LOC credit card. In addition, there exists a need for a credit card payment system that includes a zero-LOC credit card having sub-product codes that can be used to enable additional restrictions or expansions for the zero-LOC card to yield varying credit card vehicles, including, but not limited to, variations such as: (i) a teen credit card with specific limits that can later on be graduated to a regular credit card; (ii) a budget credit card to compartmentalize one's spending; (iii) an enhanced privacy protection credit card; (iv) a plurality of cards with user-controlled spending limits (for distribution within a family or small business) that are all funded dynamically by the user from another credit card; (v) a published credit card that can be used to receive payments for goods and services from other credit cards; or (vi) a credit card used to give a personal loan or gift to a friend, associate or a family member.